Bitcoin might have reached potential bottom
Bitcoin is currently trading at $19,817 after falling to a low of $19,513 on August 28. As reported by U.Today, according to an analysis by veteran trader Peter Brandt, bitcoin could hit a potential bottom that could touch the upside target. This pattern has been in place since mid-July.
After Bitcoin dipped to lows of $17,567 in mid-June, on-chain analytics firm Glassnode noted several floor formation indications flashing for the lead crypto asset. It indicated that all Bitcoin macro indicators, from technical to on-chain, had reached record lows, which had previously occurred in cycles when the bear market floor was developing.
But why is bitcoin not rallying?
Regarding tweets, Joshua LimThe Head of Derivatives at Genesis Trading stated that BTC lagged the performance of other crypto assets during the last cycle. “Most traders instinctively think BTC is trading “heavy” – why is this happening?’ Lim said.
He explains the reason why Bitcoin remains weighed down. First off, institutions are no longer “coming” as they are already here. The world’s largest asset manager, Blackrock, recently announced a private Bitcoin trust for its clients.
According to Lim, BTC is already a significant part of most traditional investors’ crypto allocations. This means that in addition to being an asset that becomes risk-free when the market turns, it is also an asset that is shortened as a beta hedge.
Second, according to the Genesis Trading expert, going short BTC is still the simplest option available to both traditional investors and those who invest exclusively in cryptocurrencies. BTC linear derivatives trade around $30 billion per day and still make up 44% of all open interest. Lastly, BTC is not only being used as a short leg against altcoins; it is also being traded against equities or other risk assets, which weighs it down even more.
Per Glassnode, while the current market structure is undoubtedly similar to the bear market of late 2018, it still lacks the macro trend reversal in profitability and demand flows needed for a sustainable uptrend. Therefore, the bottom of the ongoing cycle is most likely a consolidation phase, as bitcoin investors seek to build a stronger base that is subject to persistent uncertainty and adverse events in the macroeconomic background.
